EE heading for four hundred thousand 4G customers

EE has signed up 318,000 4G customers in the first five months and is on track to reach the 400,000 mark within days, according to CEO Olaf Swantee.

Announcing the operator’s Q1 results Swantee said: ‘In the next couple of days we will even pass the 400,000 mark, so we have strong uptake It’s not only consumers. It’s really Britain’s businesses that are waking up to the benefits of 4G.’

EE’s results show that over 1,600 medium and large companies have also signed up to its 4G service.

The company, which has 26 million total subscribers, expects to reach 1 million customers for its 4G network by the end of the year, with plans to roll out double-speed 4G in 10 cities by the end of June and provide 4G coverage to over 70% population by the end of 2013.

EE said underlying service revenue was steady at -0.4% following macroeconomic and competitive pressures. Including the impact of regulatory cuts, service revenue was down -5.4% year-on-year to £1,422 million.

The operator said it is continuing to attract high value customers. First quarter results to 31 March this year show EE's best Q1 postpaid net adds performance since the creation of the company with a net increase of 166k postpaid customers.

EE said it had 53% of its mobile customers now on postpaid plans, compared to 49% in the first quarter of 2012. ARPU also rose in the same period by 2.2%, compared to 3.9% in Q4 2012. Churn rates are also down to 1.2%, which the operator said was the the eighth consecutive quarter churn had been at 1.2% or below.

It said the rise in postpaid plans was ‘improving the value mix of EE’s customer base and driving underlying ARPU growth along with continued growth in average price plan access fees.'

EE said the uptake of smartphones was driving data revenue growth with postpaid smartphone penetration up 11% year-on-year to 82% whilst non-messaging data revenue had increased to 36% of ARPU compared to 27% in Q1 2012. Non-voice revenue also rose to 51% in Q1 compared to 45% the same period in 2012.

CFO Neal Milsom, commented: 'Today’s results are in-line with our expectations, and we are making good progress focusing on high value segments. We’re announcing 318,000 4G customers after just five months of trading, strong postpaid net adds and continued growth in our underlying average revenue per user. We expect to strengthen our industry leadership position in the year ahead as the 4G roll out continues and we introduce double-speed 4GEE.'

EE said that it is making rapid progress on its retail store integration programme, adding that it is on track to reduce its retail estate to 600 stores by the end of Q2.

The company said the take-up of 4G services amongst new and existing customers ‘validates our data monetisation strategy.'

It added: 'We continue to successfully migrate Orange and T-Mobile customers with 4G-ready phones to high value EE 4G price plans in areas where 4G coverage is available.

'We are seeing continued strong demand for 4G from businesses, with more than 1,600 now using the service including NG Bailey, PA News, Reed Recruitment, RAC, Tate & Lyle and United Utilities.’

However analysts said EE 4G subscriptions could have been higher. Emeka Obiodu, principal telco strategy analyst at Ovum said: 'We have always maintained that EE would do a lot better with LTE if it had taken a more aggressive approach towards wooing customers.

'EE effectively has a monopoly on LTE in the UK and has achieved a commendable LTE network coverage. It also has a good LTE device portfolio. Accordingly, it had all the ingredients it needs to sew up the market before its rivals move in with their own LTE offerings. But by demanding a price premium, we believe the uptake, despite today’s commendable 318,000 customers, could have been higher.'

Speaking following the results, CCS Insight's CEO Shaun Collins said: 'Persuading 15,000 customers a week to subscribe to 4G is a solid start. One million by the end of the year is well within its reach now and we expect numbers to accelerate as its competitors launch in the summer.

'EE now needs to convert this uptake into higher revenues and margins, that will be the real test in 2014 for Swantee and his team.'